Irish Wholesale Gas Prices Fall 44% in a Year
Irish-owned energy management firm Vayu Energy says that wholesale gas prices in Ireland have fallen by 44% in a year, from February 2015 to February 2016. The wholesale price for February 2016 is 10% lower than January 2016, it added.
In February 2015, the average price for wholesale gas in Ireland was €0.0234/kWh, Vayu said. This contrasts with today's average day-ahead price for gas of €0.013/kWh.
In the firm's February 2016 Energy Market Report, published on February 22, it says that the collapse in prices "is due to an overwhelming supply of gas in Europe and a very robust storage position for this time of year."
It credited LNG supply from the Middle East, strong supply from Norway, and an increase in gas exports from Russia for the downward pressure on gas prices throughout Europe.
Russia hit an historic high in terms of European gas market share with 31%, Gazprom CEO Alexei Miller said in mid-February.
Vayu also pointed to the fall in oil prices, which continues to result in "significantly weaker gas contracts for next summer and further out."
Vayu expects that pricing could continue to fall as market factors continue to weaken gas pricing.
"Abundant supplies and weak demand mean Europe is coming out of the winter season with stock levels well above normal for this time of year. This will put additional pressure on prices combined with an expected increase in LNG send-out," a senior energy analyst at Vayu, Gillian Lawler, said. "Seasonal demand should fall from here on. So barring any unplanned outages or a sustained period of cold weather, there appears only to be more downward price pressure on the horizon."
Traditionally, Ireland has been a net importer of gas relying largely on supply sourced from the UK wholesale gas market. However, following start-up of production at Shell's Corrib field off the west coast of Ireland in December 2015, the domestic market will no longer need to import the majority of the gas required to meet its needs.
At its peak, Shell expects the Corrib field to meet up to 60% of Ireland's domestic gas needs. Vayu says that during days of low demand, Corrib is projected to meet the full gas requirements of the country.
Erica Mills